How US dollars disappear in Afghanistan: quickly and thoroughly

During the past five years, the US and many other donor nations pledged billions of dollars to Afghanistan, yet Afghans keep asking: "Where did the money go?"

By Ann Jones

Remember when peaceful, democratic, reconstructed Afghanistan was
advertised as the exemplar for the extreme makeover of Iraq? In
August 2002, Secretary of Defense Donald Rumsfeld was already
proclaiming the new Afghanistan "a breathtaking accomplishment"
and "a successful model of what could happen to Iraq." As everybody
now knows, the model isn't working in Iraq. So we shouldn't be
surprised to learn that it's not working in Afghanistan either.

RAWA: From the terrible conditions of main highways, one can easily conclude that Mr. Karzai has done nothing tangible in the past 4 years to rebuild the country. Millions of $ has been given to Afghanistan by donor countries but much of it is being grabbed by warlords, NGOs and UN workers.

To understand the failure -- and fraud -- of reconstruction in
Afghanistan, you have to take a look at the peculiar system of U.S.
aid for international development. During the past five years, the
United States and many other donor nations pledged billions of
dollars to Afghanistan, yet Afghans keep asking: "Where did the money
go?" American taxpayers should be asking the same question.

The official answer is that donor funds are lost to Afghan
corruption. But shady Afghans, accustomed to two-bit bribes, are
learning about big bucks from the masters of the world.

Other answers appear in a fact-packed report issued in June 2005 by
Action Aid, a widely respected nongovernmental organization
headquartered in Johannesburg. The report studies development aid
given by all countries worldwide and says that only part of it --
maybe 40 percent -- is real. The rest is phantom aid. That is, it
never shows up in recipient countries at all.

Some of it doesn't even exist except as an accounting item, as when
countries count debt relief or the construction costs of a fancy new
embassy in the aid column. A lot of it never leaves home; paychecks
for American "experts" under contract to USAID go directly to their
U.S. banks. Much of the money is thrown away on "overpriced and
ineffective technical assistance," such as those hot-shot American
experts, the report said. And big chunks are tied to the donor, which
means that the recipient is obliged to use the money to buy products
from the donor country, even when -- especially when -- the same
goods are available cheaper at home.

To no one's surprise, the United States easily outstrips other
nations at most of these scams, making it second only to France as
the world's biggest purveyor of phantom aid. Fully 47 percent of U.S.
development aid is lavished on overpriced technical assistance. By
comparison, only 4 percent of Sweden's aid budget goes to technical
assistance, while Luxembourg and Ireland lay out only 2 percent.

As for tying aid to the purchase of donor-made products, Sweden and
Norway don't do it at all. Neither do Ireland and the United Kingdom.
But 70 percent of U.S. aid is contingent upon the recipient spending
it on American stuff, including especially American-made armaments.
The upshot is that 86 cents of every dollar of U.S. aid is phantom
aid.

According to targets set years ago by the United Nations and agreed
to by almost every country in the world, rich countries should give
0.7 percent of their national income in annual aid to poor ones. So
far, only the Scandinavian countries, the Netherlands and Luxembourg
(with real aid at 0.65 percent of its national income) even come
close.

Last year, for example, when the president sent his wife to Kabul for
a few hours of photo ops, the New York Times reported that ... she pledged that the US would give an additional $17.7 million to support education in Afghanistan.
But that grant had been announced before; and it was ... for a new private, for-profit American University of
Afghanistan. (How a private university comes to be supported by
public tax dollars and the Army Corps of Engineers is another peculiarity of Bush aid.)

San Francisco Chronicle, Sep. 5, 2006

At the other end of the scale, the United States spends a paltry 0.02
percent of national income on real aid, which works out to an annual
contribution of $8 from every citizen of the wealthiest nation in the
world. (By comparison, Swedes kick in $193 per person, Norwegians
$304, and the citizens of Luxembourg $357.) President Bush boasts of
sending billions in aid to Afghanistan, but in fact we could do
better by passing a hat.

The Bush administration often deliberately misrepresents its aid
program for domestic consumption.

Last year, for example, when the president sent his wife to Kabul for
a few hours of photo ops, the New York Times reported that her
mission was "to promise long-term commitment from the United States
to education for women and children." Speaking in Kabul, she pledged
that the United States would give an additional $17.7 million to
support education in Afghanistan. But that grant had been announced
before; and it was not for Afghan education (or women and children)
at all but for a new private, for-profit American University of
Afghanistan. (How a private university comes to be supported by
public tax dollars and the Army Corps of Engineers is another
peculiarity of Bush aid.)

Ashraf Ghani, former finance minister of Afghanistan and president of
Kabul University, complained, "You cannot support private education
and ignore public education." But that's typical of American aid.
Having set up a government in Afghanistan, the United States stiffs
it, preferring to channel aid money to private American contractors.
Increasingly privatized, U.S. aid becomes just one more mechanism for
transferring tax dollars to the pockets of rich Americans.

In 2001, Andrew Natsios, then head of USAID, cited foreign aid as "a
key foreign policy instrument" designed to help other
countries "become better markets for U.S. exports."

To guarantee that mission, the State Department recently took over
the formerly semi-autonomous aid agency. And because the aim of U.S.
aid is to make the world safe for U.S. business, USAID now cuts in
business from the start. It sends out requests for proposals to the
short list of usual suspects and awards contracts to those bidders
currently in favor. (Election time kickbacks influence the list of
favorites.) Sometimes it invites only one contractor to apply, the
same efficient procedure that made Halliburton so notorious and so
profitable in Iraq.

The criteria for selection of contractors have little or nothing to
do with conditions in the recipient country, and they are not exactly
what you would call transparent.

Take, for example, the case of the Kabul-Kandahar Highway, featured
on the USAID Web site as a proud accomplishment. (In five years, it's
the only accomplishment in highway building in Afghanistan -- which
is one better than the U.S. record building power stations, water
systems, sewer systems or dams.) The highway was also featured in the
Kabul Weekly newspaper in March 2005 under the headline, "Millions
Wasted on Second-Rate Roads."

Afghan journalist Mirwais Harooni reported that even though other
international companies had been ready to rebuild the highway for
$250,000 per kilometer, the Louis Berger Group got the job at
$700,000 per kilometer -- of which there are 389. Why? The standard
American answer is that Americans do better work. (Though not Berger,
which at the time was already years behind on another $665 million
contract to build schools.)

Berger subcontracted Turkish and Indian companies to build the narrow
two-lane, shoulderless highway at a final cost of about $1 million
per mile; and anyone who travels it can see that it is already
falling apart. (Former Minister of Planning Ramazan Bashardost
complained that when it came to building roads, the Taliban did a
better job.)

Now, in a move certain to tank President Hamid Karzai's approval
ratings and further endanger U.S. and NATO troops in the area, the
United States has pressured his government to turn this "gift of the
people of the United States" into a toll road and collect $20 a month
from Afghan drivers. In this way, according to U.S. experts providing
highly paid technical assistance, Afghanistan can collect $30 million
annually from its impoverished citizens and thereby decrease the
foreign aid "burden" on the United States.

Is it any wonder that foreign aid seems to ordinary Afghans to be
something only foreigners enjoy?

At one end of the infamous highway, in Kabul, Afghans disapprove of
the fancy restaurants where foreigners gather -- men and women
together -- to drink alcohol and carry on, and plunge half-naked into
swimming pools. They object to the brothels -- 80 of them by 2005 --
that house women brought in to serve foreign men.

They complain that half the capital city lies in ruins, that many
people still live in tents, that thousands can't find jobs, that
children go hungry, that schools are overcrowded and hospitals dirty,
that women in tattered burqas still beg in the streets and turn to
prostitution, that children are kidnapped and sold into slavery or
murdered for their kidneys or their eyes.

They wonder where the promised aid money went and what the puppet
government can do.

Ann Jones is the author of "Kabul in Winter," a memoir of
Afghanistan, where she lived for several years.